Friday, March 18, 2005

John Bolton and Paul Wolfowitz

President George Bush of the US has appointed two icons of neocon movement: John Bolton as US Ambassador to the UN and Paul Wolfowitz, the serving Undersecretary of Defense, to the presidency of the World Bank.

Several people are trying to club the two. However there is no relationship between the two appointments. I have no concern about who is appointed as the US Ambassador to the UN. The job of the US Ambassador in UN is to present the viewpoints of US - and particularly that of the current Government - strongly in UN. John Bolton, neocon or not, would probably do that job well. Good luck to him. His appointment may annoy several people in the US, but that is their problem. They elected Bush for a second term and must suffer. Apparently John Bolton is of the view that the UN is a waste of time and wants the UN to lose a lot of funding and staff. Perhaps Bolton is right. He may fight for his cause from within.

My problem is with Paul Wolfowitz nomination. Though it is not a done deal, the US looks all set to get away with this appointment. The World Bank is a development agency. It is a pure lending agency and lends the money it gets from International donors to needy countries from around the world, on specific developmental objectives. Indian state governments borrow money from the World Bank. China borrows from the World Bank. Several Asian, African and Latin American countries borrow from the World Bank. The US, Japan and most of the European countries provide funds to the World Bank for the Bank in turn to manage lending to poor countries.

The World Bank normally links the loans to certain performance guarantees. The Bank expects the concerned governments to be free of corruption, transparent in its functioning, and fairly solvent so that they can pay the loans back to the Bank. The Bank hates to see the monies they provide to be given away by the governments in their election promises. The Bank hates to see governments building up their fiscal deficit. This is because the Bank has in general faced payment problems. Most African countries have had historically bad governance - despots and dictators borrowing freely from the Bank, stashing them away in Swiss banks and eventually fleeing the country or getting killed. The successor governments beg to have the loans written off. Several projects financed by the World Bank have delivery problems. They do not get completed in time. They are managed by inefficient governments and staff. It is indeed a worrying scenario for a lending agency to see its money wasted.

There are also success stories. Mostly in Asia, including India. Indian state governments have borrowed and paid back; such loans are always guaranteed by the central government. Indian state governments would want to borrow more.

Let us look at the countries that generally borrow from the World Bank. They are all (a) developing and hence invariably have poorer economies. (b) poorer democracies or not democratic at all. (c) will crumble and make their people worse off if such developmental aid/loans or not given for crucial projects.

It is therefore important for the chief of the World Bank to show compassion, understanding and yet a firm control and the ability to drive the respective countries/project managers to deliver on the projects (which should be the first priority) and then pay back the money borrowed (second priority).

Does Paul Wolfowitz have these qualities? Perhaps he has. But what little we know of him, he doesn't care about countries other than his own. He is too strongly entrenched in neocon beliefs and believes that confrontation and military power are the best means of solving the problems. If the US went on a war in Iraq, this man takes the entire credit for this. For all his junior status, he was the one driving Donald Rumsfeld and checkmating Colin Powell in the cabinet, to achieve the war goals. As with most neocons, he has strong links to the oil industry and the war industry. The thin veneer of a Ph.D (and a bachelors from my dear Cornell University!) cannot hide the man's aggressive intentions and contempt for diversity and opposing viewpoints.

Tomorrow, he will influence the decisions on whether Ghana can be given $20 million to build some wells for irrigation. He will oversea whether North Korea can be given $50 million for laying much needed roads in their rural areas. He will also oversea whether monies should be given to India and China.

Neocons are of the view that other countries should dismantle tariff barriers so that American big businesses can have a field day in those markets. While it is not the job of the World Bank to advice on whether or not tariffs should be dismantled or not, the World Bank and IMF keep meddling in these internal matters of a sovereign country. They have to be listened to, particularly by the weaker countries. As otherwise, the loans may simply not come through. Or mysteriously the process of getting the loans could take more time. In this sense, our local banks and the World Bank behave more or less the same way.

It may not be good for most countries to please Wolfowitz to get the loans, or writing off past debts etc. Faced with a difficult choice they may either succumb or not take the loan. The latter is also dangerous for their country.

Why should such a difficult decision be imposed on the world's poor?

Wolfowitz in an interview to Financial Times says he will not impose US' will, but will rather "got to try to bring all those different views together . . . to shape a common approach." Apparently, he "stressed the importance of fighting corruption and promoting transparency and accountability."

Developing countries are mostly corrupt and less transparent. Accountability is poor because of lack of systems and also the fact that there is an attempt at corruption. However these things cannot be imposted from the top. If loans are to be given only to the most clean and accountable country, none would receive it. The Bank should rather focus on the needy, allow for certain ineffciencies in the system and ensure that the money comes back in due course and that they do not have to constantly keep writing off the loans.

What we need is a compassionate and strong individual. Wolfowitz is strong, but is also a hawk and a man with very little credibility outside the neocon group.

He is, I think, a bad news for the developing world.

1 comment:

  1. Badri, I very much agree with your views on Developing countries like India and China. The main problem atleast in India is we don't have right people in the right areas. A country like India with it's sheer pospulation should have been number 1 in sports or entertainment. India has the capacity to rule the world.

    Balachandar Raghavan